The concept of service charge administration cannot be over emphasised in property management today as it is a paramount aspect of property management especially in multi-tenanted properties where there is an element of multiple occupation by tenants and the servicing of common needs arises such as maintenance and use of lifts, maintenance and fueling of generator, gardening, lighting and cleaning of common parts, dislodgement of septic tanks, security services, etc.
Service charge as applied to property management is a special money collected by the property owner or managing agent from tenants and occupiers of a property for providing common services that they and the landlord have agreed should be provided and centrally coordinated by an expert in the field which in this case is an estate surveyor and valuer. The term ‘service charge’ refers not only to the actual cost involved in providing the services but also to the range of obligations, liabilities and administrative procedures and also the cost of complying with the obligations.
The occupiers of multi-tenanted properties usually pay an additional levy or charge for the discharge of obligations which would have been carried out by the tenants or occupiers themselves but which may be complex due to multiple occupation.
The services to be provided in the building is very essential and this must be taken care of right from the design and construction stage of the building for effective administration of services. The problems of service charge in commercial properties are enormous and differ from one property to another. Also, the nature and type of the property is another factor that may create problems. For instance, shopping complex are noted to be more problematic than office complex due the nature of activities. Equally high rise complexes have their own peculiar challenges different from simple office building. In practice, it has also being discovered that the nature of tenants has effect on service charge administration. Challenges in office complex do vary from one property to another, and may ranges from design problem, construction, size and age.Problems also arise from non-payment of service charge deposit by occupiers, idiosyncratic management practices and lack of cooperation.
Service charge has two broad areas of costs that are ‘service and works.’ Service refers to housekeeping and includes cost of cleaning, fuel, staffing, etc, while works refers to repairs, replacement, maintenance and improvement. The general acceptable standard and its effective application will reduce the potential for conflict between owners, management surveyors and tenants and thereby increase the attractiveness of office complexes for investment.
Meaning Of Office Complex
An office is a place meant specifically for carrying out activity or activities of a business organisation. According to Wikipedia (2007), the primary purpose of an office building is to provide a workplace and working environment primarily for administrative and managerial workers. The Webster’s New World Dictionary (1967), defines an office as a room or premises for administrative or clerical work or for transactional business or simply put, an office is place of business where professional or clerical duties are performed.
An office complex could thus be described as purposed built building providing multiple accommodations for business transactions, professional services, clerical works and any such transactions whether public or private.
Two types of office complexes are common, namely small or simple office building, and large office building.
Small/Simple Office Buildings
These are office accommodations simply designed with floor ranging from one to four floors. The designs could be open planned or partitioned. The services and facilities to be provided in these building may not be enormous. Services usually provided are minimal and there are some of them that are not serviced beyond security and refuse collection. The designs are simple and the numbers of occupiers are few. Most of the small office buildings do not have lift services and central air-conditioning system.
Large Office Complex
These are usually regarded as high rise buildings, which is a described as multi-units office building with many floors and made of concrete and steel structures. The lobby, elevators and hallways are common to all units. high rise building are designed with high technical involvement and incorporated a lot of mechanical and electrical equipment. These equipment and appliances ranges from air-conditioner units, lifts and elevators, power generating plants, automated security doors, among others which requires good maintenance.
Management of these facilities/services is very important and require the adequate maintenance programme to ensure continue functionality. Hence, service charge is introduced and is applied to manage these facilities.
Elements Of Service Charge In Office Building
Service charge as applicable to the management of office complex usually covers the followings; cleaning of common parts such as corridors, lobbies, car parks, including cleaning of weeds in the surroundings.
Lighting of common parts which include replacement of fluorescents tubes, bulbs, switches etc, provision of uniform security guards for the premises, maintenance of lifts (if any), air-conditioning, generator and other installations,fumigation and pests control in the premises,payment for emptying and cleaning of the septic tank and soak-away pits, provision of utilities such as water, electricity in common areas,settlement of bills for disposal of refuses and liquid wastes, salaries and wages of administrative and technical staff on site, and any other services jointly agreed to be provided for the occupiers.
Esv. Olusegun Odetoyinbo, is the principal partner, Segun Odetoyinbo & co. Estate Surveyors & Valuers
